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November 17, 2010, 6:06 AM EST
By Karin Matussek
Nov. 17 (Bloomberg) -- Germany’s financial regulator Bafin has for a second time tried to block a scam that exploits investors by using a website that provides fake authorization from a made-up regulator.
Bafin today published prohibition orders against a “Frankfurt Financial Supervisory Authority” website and against Lance Futures, an operation that allegedly employed the fake regulator to give itself legitimacy as a broker. Lance Futures tried to sell gold options without a license, Bafin spokesman Sven Gebauer said in an interview.
“The people who set up this scam were using very sophisticated tools and made the website look like that of a professional regulator,” said Gebauer. “They made the site very similar in appearance to ours.”
Lance Futures operated a website which claimed it was a commodity futures brokerage. Bafin successful shut down their domain “lancefutures.com” only to see it reopened under “lance-futures.com,” according to the prohibition order. The second site has now also been blocked.
It isn’t the first time Germany has experienced investor fraud. Yesterday, prosecutors charged the founder if K1 group, Helmut Kiener with defrauding about 5,000 investors of 122 million euros ($165 million). Kiener has denied the charges. Bafin, which has a special illegal operations unit that targeted the firm, couldn’t stop K1 when it moved its funds abroad.
$200,000 Lost
Bafin was alerted to the Lance Futures scam by an Australian investor who said he lost $200,000 he paid to a Lance Futures account in Hong Kong, according to Gebauer. The regulator first reacted with a press release in October and now issued the prohibitions orders because it was likely that Lances Futures and the faked regulator website reemerged on a new domain, he said.
Bloomberg was unable to contact Lance Futures for comment by phone yesterday or today. There was no answer at the number listed on its former website.
People who were cold-called by Lance Futures personnel were told the company was a licensed broker on the Frankfurt Financial Supervisory Authority’s website, according to Bafin.
“They tried to make people believe that this authority is Germany’s regulator and the website even had a function allowing people to search for licensed companies,” said Gebauer.“It only had the little flaw that it didn’t even list Deutsche Bank AG as a licensed lender.”
It’s unclear where Lance Futures operates, said Gebauer. Their website had listed a Frankfurt address, according to copies provided by Bafin. While using a prominent street in Frankfurt financial district, the address didn’t refer to an actual building, said Gebauer.
--Editor: Christopher Scinta, Anthony Aarons
To contact the reporter on this story: Karin Matussek in Berlin at kmatussek@bloomberg.net
To contact the editor responsible for this story: Anthony Aarons in London at aaarons@Bloomberg.net.
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Nov. 17 (Bloomberg) -- Germany’s financial regulator Bafin has for a second time tried to block a scam that exploits investors by using a website that provides fake authorization from a made-up regulator.
Bafin today published prohibition orders against a “Frankfurt Financial Supervisory Authority” website and against Lance Futures, an operation that allegedly employed the fake regulator to give itself legitimacy as a broker. Lance Futures tried to sell gold options without a license, Bafin spokesman Sven Gebauer said in an interview.
“The people who set up this scam were using very sophisticated tools and made the website look like that of a professional regulator,” said Gebauer. “They made the site very similar in appearance to ours.”
Lance Futures operated a website which claimed it was a commodity futures brokerage. Bafin successful shut down their domain “lancefutures.com” only to see it reopened under “lance-futures.com,” according to the prohibition order. The second site has now also been blocked.
It isn’t the first time Germany has experienced investor fraud. Yesterday, prosecutors charged the founder if K1 group, Helmut Kiener with defrauding about 5,000 investors of 122 million euros ($165 million). Kiener has denied the charges. Bafin, which has a special illegal operations unit that targeted the firm, couldn’t stop K1 when it moved its funds abroad.
$200,000 Lost
Bafin was alerted to the Lance Futures scam by an Australian investor who said he lost $200,000 he paid to a Lance Futures account in Hong Kong, according to Gebauer. The regulator first reacted with a press release in October and now issued the prohibitions orders because it was likely that Lances Futures and the faked regulator website reemerged on a new domain, he said.
Bloomberg was unable to contact Lance Futures for comment by phone yesterday or today. There was no answer at the number listed on its former website.
People who were cold-called by Lance Futures personnel were told the company was a licensed broker on the Frankfurt Financial Supervisory Authority’s website, according to Bafin.
“They tried to make people believe that this authority is Germany’s regulator and the website even had a function allowing people to search for licensed companies,” said Gebauer.“It only had the little flaw that it didn’t even list Deutsche Bank AG as a licensed lender.”
It’s unclear where Lance Futures operates, said Gebauer. Their website had listed a Frankfurt address, according to copies provided by Bafin. While using a prominent street in Frankfurt financial district, the address didn’t refer to an actual building, said Gebauer.
--Editor: Christopher Scinta, Anthony Aarons
To contact the reporter on this story: Karin Matussek in Berlin at kmatussek@bloomberg.net
To contact the editor responsible for this story: Anthony Aarons in London at aaarons@Bloomberg.net.
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